Snap did what it said it would, so why is its stock struggling?
The technology company behind Los Angeles Snapchat provides a simple point of sale for investors: we will publish the most important features that all our competitors can produce.
During its first four months as a listed company, Snap Inc. maintained its market share. It has implemented a mapping tool that reveals the location of friends and trends, has launched several short video series and allowed all advertisers to buy commercial time at Snapchat.
The company has also taken Instagram by combining the reading of the message options.
However, despite the changes, investors did not consider Snap more valuable when it was made public. Instant stock fell below its opening price of $ 17 in March to $ 15.27 on Friday.
The company’s market capitalization, about 18 billion, based on exactly where it did in the months leading up to California’s largest takeover bid for Southern California.
There is no shortage of concerns about Snap, which will release its financial results for the second quarter on August 10.
Financial analysts estimate the company will lose $ 3.3 billion this year, according to market research aggregator FactSet. Much of SNAP’s expenses are compensation for employees’ actions.
Questions about how to make Snap money before your IPO. Investors and analysts say that this has led the population to give up a sense of fear among investors that, regardless of the number of creative features it launches, Snapchat may be too small a player in the application of the economy to carry High evaluation.
At present, while Snap look “tackle very pronounced defensive winds, we prefer to fish in better waters,” said Christopher Versace, chief investment researcher, who provides advice to individual investors.
Snap generates revenue by selling ads that appear on Snapchat.
The varieties include 10 seconds of ads bought by companies like Adidas, Spotify and Arabs, as well as small decorative graphics that anyone can buy to celebrate an event.
But it is still a work in progress for many large budget advertisers to determine if the items they purchase are worth it.
The new month brought more sophisticated measures to help retailers follow if the ads generate in-store visits and purchases.
Morgan Stanley stock analyst Brian Nowak said last week that the initiatives were disconcerting and had slashed estimates of growth in Snap advertising sales.
Others expressed concern about users ignoring Snapchat ads and the special effort required to design the app’s ads.
Martin Sorrell, CEO of giant advertising agency WPP gave little enthusiasm about Snap in television interviews. Facebook said – it reproduces many of the most popular features in its Instagram and Snapchat Messenger applications – responded “Snap success”.
WPP spends about $ 2 billion every year for the purchase of Facebook ads for customers like Ford and Procter & Gamble. Your Snapchat advertising expenses could double to 200 million this year.